That's the upshot of what seemed, at first glance, to be a really very modest contract awarded by the Pentagon to defense contractor Northrop Grumman . On a slow day for contract awards in general (it was, after all, Christmas Eve), the Department of Defense announced it had granted Northrop Grumman $93.1 million in funding to "design, develop, and demonstrate enabling technologies and system attributes for a medium-altitude long-endurance unmanned air vehicle and shipboard-capable launch and recovery system allowing operations from smaller ships."

That's a whole lot of Pentagon-speak there. But what it boils down to is this: Two months ago, rival drone-builder AeroVironmenttold investors it will not proceed to Phase 3 of the DARPA TERNproject to land large unmanned aerial vehicles (UAVs, or more commonly, just "drones") on small warships. At the time, we speculated that this meant Northrop Grumman would win the contract -- and we were right.

Northrop won TERN. Northrop will build TERN. But... what exactly is TERN, anyway?

This is a tern. But it's not a Northrop Grumman TERN. Image source: Wikimedia Commons.

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A TERN is a bird. No, really.Throughout the first two phases of the Defense Advanced Research Projects Agency's TERN project -- short for Tactically Exploited Reconnaissance Node -- TERN appeared to be hardware. Contractors would design some way to permit a small warship to capture, bring on board, refuel, and relaunch existing medium-size drone aircraft.

Early updates on the program's progress suggested this might be done by having a drone latch onto a floating "kite," then reeling it down onto deck...

And as it "TERNs" out, DARPA actually liked both those ideas and is funding their further development. But what really captured the imagination of the Pentagon's mad scientists is a new kind of drone that Northrop proposed building.

What TERN will beDetails on Northrop's new TERN drone proposal remain under tight wraps at the Pentagon. Nevertheless, website BreakingDefense reported earlier this month that Northrop has promised to build DARPA a "flying wing helicopter," triangular in shape, roughly 40 feet on a side, and propelled by two "10-foot counter-rotating rotors." If you can picture something like the below -- but triangular in form rather than cross-shaped -- you should have a good idea of what Northrop proposes to build:

The new drone is apparently "weaponizable," and capable of carrying 600 pounds of ordnance over distances as great as 900 nautical miles. It would both launch from and land on warships as small as a Navy Littoral Combat Ship from a "tailsitter" position -- propellers pointed at the sky.

What it means to investorsBack when we first heard about DARPA's TERN program in April, we went over the numbers for how this new project might benefit its ultimate winner. Now that we know this winner is Northrop Grumman, it's time to review:

But conservatively, let's say just one TERN per each of the 272 ships in the U.S. "battle force." Now, multiply that by TERN's cost: $22 million spent on development so far, plus a further $93 million now awarded to Northrop Grumman, makes $115 million allocated to TERN so far. Individual production costs should be much less than that. But even if each TERN costs "only" $10 million, the program very quickly rises into the $2 billion-plus range for potential value to Northrop Grumman. My hunch is, though, that once all's said and done and TERN is a proven product, we will be talking not about billions of dollars, but multiple tens of billions in new revenue for Northrop.

Now, all Northrop Grumman must do to make this happen... is hatch itself a TERN.

Today, the flight deck on a U.S. Navy frigate is too small for most drones to land on. TERN will change that -- and Northrop Grumman will profit from that. Image source:LOCKHEED MARTIN.